Macroeconomic DEVELOPMENT

The global economy continued to gain momentum over the course of the reporting year. This was driven on the hand by strong private consumption and thriving global trade, and, on the hand, by highly dynamic investment growth in most industrial and emerging economies. In its January 2018 forecast, the International Monetary Fund (IMF) estimates that in 2017 gross domestic product (GDP) increased by 4.7 percent in the emerging and developing countries and by 2.3 percent in the industrialized countries.

In our core markets, economic growth rates largely recorded positive trends in 2017. GDP in Germany increased by 2.2 percent year-on-year, again driven in particular by growth in exports and private consumption. Averaging 5.7 percent, the unemployment rate in 2017 was at its lowest level since German reunification. The U.S. economy grew by 2.3 percent in the reporting year, with unemployment falling to 4.1 percent as of the end of the year, its lowest level in 17 years. GDP growth rates continued to develop very positively in 2017 in virtually all countries in our Europe operating segment. The economies continued to profit from rising domestic consumption and stable demand, primarily from the eurozone. Even the Greek economy has stabilized.

The situation in the national labor markets in our Europe operating segment continued to improve in most countries thanks to positive economic growth. The deep recession of the last few years means that Greece continues to suffer from high structural unemployment. High structural unemployment rates lead to reduced purchasing power among those affected and impact on their willingness to spend. Some customers have adapted their demand behavior. In addition to long-term unemployment, austerity measures in the public sector and the low willingness to invest also had a detrimental effect on demand for telecommunications and ICT services. In some countries, the intense pressure to shore up state finances led to special taxes being maintained for telecommunications companies.

The following table shows the GDP growth rate trends and the unemployment rates in our most important markets.

Development of GDP and the unemployment rate in our core markets from 2015 to 2017